CMS's CY 2027 proposal would pay 50% of the normal rate for the lower-valued service when a practice bills a separately identifiable office visit and a procedure on the same day. Milliman, in an analysis for the American Academy of Dermatology Association, estimated the policy would cut Medicare allowed amounts by about $969 million in 2024 terms.
What CMS proposed for same-day visits
Holland & Knight reports that CMS released the CY 2027 Physician Fee Schedule proposed rule on July 14, 2026. The rule covers an office or outpatient E/M visit billed with modifier 25 on the same day as a procedure with a 0-, 10- or 90-day global period. Medicare would pay the highest-valued service at 100% and every other eligible service that day at 50%.
HFMA's executive impact brief on the rule, dated August 10, 2026, lists the same 50% figure. CMS's stated reason is that the current method may overstate the resources used. A University of Texas Health Science Center at Houston compliance page lists the shared items CMS has in mind: registration, history, record review, clinical staff support and exam room use. CMS does not propose to end payment for modifier 25 visits. The visit must still be significant and separately identifiable.
The comment period closed on September 14, 2026, and most changes would start on January 1, 2027. The American Association of Neurological Surgeons notes that CMS declined a similar proposal in 2019.
The cut sits on top of a lower conversion factor. Holland & Knight lists the proposed factor for qualifying APM participants at $33.1693, down 1.19% from $33.5675. For all other clinicians it is $32.8409, down 1.68% from $33.4009.
The dollar effect in Milliman's estimate
Milliman used CY 2024 Medicare fee-for-service claims from CMS's 5% Limited Data Set and extrapolated them to a national basis. The firm modeled the rule as written: the top-valued service at 100% and other eligible services at 50%.
Its estimate for all specialties is a reduction of about $969 million in allowed amounts. That equals about 0.6% of total physician and supplier Part B allowed amounts and 1.0% of total Medicare Physician Fee Schedule allowed amounts. Across the whole program the share looks small.
The impact is concentrated. Dermatology accounts for about $291 million of the $969 million, or 30.0%. Milliman puts the dermatology reduction at about 6.1% of that specialty's Part B allowed amounts and about 7% of its fee schedule allowed amounts. The dermatology estimate covers roughly 6.4 million billing-group days.
Milliman prepared the analysis for the American Academy of Dermatology Association, and the article is dated October 12, 2026. A September version came first, and the update added an appendix on physician assistants and nurse practitioners in dermatology.
Which specialties lose the most
HFMA's brief reports proposed RVU changes before the conversion factor effect. The table shows the five it names.
| Specialty | Proposed RVU change, CY 2027 |
|---|---|
| Dermatology | -9% |
| Otolaryngology | -9% |
| Orthopedic surgery | -7% |
| Clinical psychology | +11% |
| Clinical social work | +12% |
Source: HFMA, CY 2027 PFS Proposed Rule Executive Impact Brief, August 10, 2026.
Holland & Knight expects a large negative effect for otolaryngology, dermatology and podiatry. It expects a smaller negative effect for hand surgery, physician assistants, and colon and rectal surgery. Most other specialties would see a small gain as RVUs are redistributed.
The American Academy of Otolaryngology-Head and Neck Surgery puts the otolaryngology cut at an estimated 9% overall and 10% in the non-facility setting. The University of Texas compliance page names seven specialties that often bill the combination: dermatology, orthopedics, ophthalmology, pain management, ENT, urology and family medicine.
A worked example from otolaryngology
Rahul K. Shah, MD, the academy's chief executive, published a payment example on August 4, 2026. A diagnostic laryngoscopy (CPT 31575) billed with a new patient visit (CPT 99203) would see combined Medicare payment fall from about $245 to about $186.
That is a drop of $59, or 24.1%, on one pairing. At that gap, 100 same-day pairings would lose $5,900 in Medicare payment. The figure is arithmetic on the academy's example, not a forecast for any one practice.
The drop is larger than the 9% to 10% specialty figure because the specialty figure averages across all of a specialty's services. A pairing that triggers the 50% rule takes the full reduction on its lower-valued line.
What practices can model before the final rule
HFMA tells organizations to model net impact by specialty, site of service, modifier 25 use, practice expense RVU shifts and qualifying APM status, not by the conversion factor alone. The brief also lists the proposed practice expense changes. CMS would phase out the indirect practice cost index over two years and cap annual practice expense RVU changes at 5% for most existing codes.
A practice can size its own exposure from claims. Count the days when a modifier 25 visit and a 0-, 10- or 90-day global procedure appear under the same billing group. For each day, take the allowed amount of the lower-valued service and halve it. The sum is the Medicare effect of the 50% rule before any conversion factor change.
The same HFMA brief flags a separate item for some specialists. The mandatory Ambulatory Specialty Model begins January 1, 2027 for selected cardiology and low back pain clinicians, with first payment adjustments of up to 9% in 2029 that can later reach 12%.
HFMA's timeline lists January 1, 2028 as the date the indirect practice cost index is fully removed.
Sources
- Holland & Knight, CMS Issues CY 2027 Medicare Physician Fee Schedule Proposed Rule, July 2026
- Milliman, Estimated payment impact of the CY 2027 MPFS proposed modifier 25 policy on same-day dermatology services, October 12, 2026
- HFMA, CY 2027 PFS Proposed Rule Executive Impact Brief, August 10, 2026
- AAO-HNS Bulletin, Rahul K. Shah, MD, It's Not Raining. It's a Monsoon., August 4, 2026
- UTHealth Houston Medical School Healthcare Billing Compliance, 2027 Proposed Modifier -25 Changes, 2026
- AANS, AMA Federation Comments on CY 2027 Medicare Physician Fee Schedule Proposed Rule, Modifier 25, August 27, 2026
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